Report From the States
MSAs Flouishing in South Africa
National Center for Policy Analysis (NCPA)
Medical Savings Accounts (MSAs) captured half the market for private insurance in South Africa during the regime of Nelson Mandela, according to a new study by the National Center for Policy Analysis (NCPA). The study is a first-of-its-kind analysis of MSA plans using insurance company records done anywhere in the world.
"MSAs are enormously popular in our country," said Shaun Matisonn, the study's author, and a Risk Management Actuary at Discovery Health, a South African insurance company. "By contrast, U.S.-style managed care has made very few inroads."
The United States created a MSA pilot program in 1996 for the self-employed and small businesses with 50 or fewer employees. Under the program employers and their employees can make tax free deposits to the accounts. The MSAs must be combined with high-deductible health insurance, and MSA funds are used to pay small and routine health care bills, leaving insurance to pay more costly ones.
The South African legal climate has been much more favorable. Following deregulation in 1994, virtually all forms of insurance found in the U.S. have competed on a level playing field, including HMOs and MSA plans. "Not only have MSA plans proved popular, they have also developed in ways that are better designed to meet customer needs than in the U.S.," said Matisonn.
° "Whereas MSA plans in this country have an across-the-board deductible covering all medical services, South African MSA plans have varying deductibles.
° A typical South African MSA plan has no deductible for hospital care on the theory that patients exercise little discretion within hospitals; but a $1,200 deductible for outpatient care is common on the theory that patients have a lot of discretion in that setting.
° The high deductible also applies to drugs, but for chronic conditions for which skimping on drugs could lead to more expensive care later on, the deductible drops back to zero.
Critics of MSA plans in the U.S. often suggest that only the healthy and wealthy will take advantage of MSAs, and that people will skimp on needed care. The South African experience seems to disprove those claims. According to the study:
° Although MSA plans appeal to people who are healthy, those who are sick and have high health care costs are also financially better off in MSA plans than under traditional insurance.
° Judged by the incidence of catastrophic claims, MSA holders are not healthier as a group than enrollees in conventional insurance plans.
° While the average MSA holder spends about half as much on outpatient services as people in traditional plans, there is no evidence that they skimp on primary care in ways that lead to higher hospital costs later on.
National Center for Policy Analysis, Dallas, Texas, http://www.ncpa.org.
Originally published in the Medical Sentinel 2000;5(6);216-217. Copyright©2000
Association of American Physicians and Surgeons (AAPS)